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Updated about 9 years ago, 10/10/2015
Buying a buy and hold in my LLC
Hey guys, beginner questions here:
I'm shopping for my first buy and hold property and want it to be owned under my LLC. I currently have established an LLC and have my certificate of organization.
The LLC is based in Georigia and I'm looking to buy in Birmingham.
Is there anything else in particular I need to establish to close on the property? (e.g. Bank account in the name of my LLC, etc)
- Dave
You will have to have bank accounts in your LLC name. What is the point of creating a separate entity if the first thing you do is use personal accounts for its funding? You will basically have pierced the veil for any lawsuit that comes your way.
You will also want to look at registering your LLC to operate in Alabama. Your entity is good to go for operations in GA, but that doesn't mean it is allowed to function in any other State.
If you are going to finance the property, you will want to get lenders on board before buying. Loans to LLCs are not the same as loans to people.
That is correct. You have a valid LLC in Georgia but you either need to establish a new LLC in Alabama or create a foreign LLC in Alabama. Most of my clients choose to do a foreign LLC due to costs.
Originally posted by @Brian Cloud:
That is correct. You have a valid LLC in Georgia but you either need to establish a new LLC in Alabama or create a foreign LLC in Alabama. Most of my clients choose to do a foreign LLC due to costs.
Thank you.
The Alabama SOS site appears to show that an in-state address is needed for registering an LLC (domestic and foreign). I don't have an office in Alabama to use for the registration. Any advice?
Use a registered agent service.
-https://www.legalzoom.com/articles/why-do-i-need-a-registered-agent
Also, before you go through the hassle of setting up a new LLC -- I'd advise you to reach out to various lenders and identify a couple of lenders you can work with who will actually loan to this new LLC.
Unless you plan on performing full-cash deals - you need to have a couple investor friendly lenders lined up for when closing your deals, or use creative financing. If you can't get anyone to lend to your LLC (banks want a name to tie the loan to), it doesn't make sense to continue wasting your money setting the LLC up correctly.
Maybe look into an umbrella policy with your insurance company to provide additional protection as an alternative, when you begin to grow.
you can call me. We routinely set up llcs and serve as registered agents.
Make sure to get an EIN for your LLC if the structure requires it (Partnership, etc..)
@Dan C. is correct about using a Registered Agent for another state. That is the way to go. You probably cannot use a PO box for registration.
For buy and hold in your LLC, you are going to want to find community banks in Alabama that do portfolio lending. You should be able to find 20-year amortization loans, with various fixed periods, and rates around 2% higher than conforming.
I would recommend you set up an LLC. Alabama has an unique statute referred to as the open door policy. If you are an out of state LLC and conducting intrastate commerce, not interstate commerce with the state and you don't have an LLC, then your contracts/leases are voidable. Of course you could always buy it as a sole proprietor but then you are taking liability risk.
Originally posted by @Dave Williamson:
Hey guys, beginner questions here:
I'm shopping for my first buy and hold property and want it to be owned under my LLC. I currently have established an LLC and have my certificate of organization.
The LLC is based in Georigia and I'm looking to buy in Birmingham.
Is there anything else in particular I need to establish to close on the property? (e.g. Bank account in the name of my LLC, etc)
- Dave
Are you planning to do business in both Georgia and Alabama or just in Alabama?
Originally posted by @Account Closed:
Originally posted by @Dave Williamson:
Hey guys, beginner questions here:
I'm shopping for my first buy and hold property and want it to be owned under my LLC. I currently have established an LLC and have my certificate of organization.
The LLC is based in Georigia and I'm looking to buy in Birmingham.
Is there anything else in particular I need to establish to close on the property? (e.g. Bank account in the name of my LLC, etc)
- Dave
Are you planning to do business in both Georgia and Alabama or just in Alabama?
I plan to do business in both. My plan is to have a few LLCs with about four houses in each within the next 24 months. Why do you ask?
Originally posted by @Dave Williamson:
I plan to do business in both. My plan is to have a few LLCs with about four houses in each within the next 24 months. Why do you ask?
Typically when/if you do business in multiple states, each state may require the LLC be incorporated there also. You have to be aware though what the yearly cost of maintaining the LLCs are in each state.